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Topic Review (Newest First)

10-26-2011 10:09 AM

marcusc130

I've just negotiated the purchase of my second boat. The sellers asking price was very reasonable, and had already been discounted for some needed repairs, so he wasn't willing to accept a lower offer. However, I was able to negotiate some other benefits.

Since I'm buying in the fall, I wanted the boat to remain on his property for the winter. The seller also agreed to shrink-wrap the boat. On top of this, the seller has allowed me use of his mooring for the next season. All of this has added up to several thousand dollar worth of saved storage, maintenance, and mooring fees.

If the asking price is firm, look for other concessions.

10-20-2011 05:03 PM

jameswilson29

This contract has been recommended to buyers several times in different posts on this listserv as a fair contract and I just want potential buyers to realize that it was drafted to protect the broker's and the seller's interests, and not the buyer's interests.

The broker's interests are to earn a commission, to quickly resolve a sale one way or the other, and to avoid being sued, all while protecting the seller, and the contract reflects that.

(I have no quarrel with a written disclosure of the agency relationship, which could more properly be done on a separate form much earlier in the process when the broker first has a substantive discussion with the potential buyer.)

10-20-2011 02:43 PM

Minnewaska

James, I think you're right in your interpretation. However, why would the buyer care, they are all statements of fact.

If you trying to exclude the affirmation of single seller agency so that you may argue otherwise in favor of the buyer, that is unethical. The broker does only represent the seller, unless the seller has hired and paid for their own separately. Taking advantage of not affirming this is the reason these contracts proliferate.

10-20-2011 09:56 AM

jameswilson29

One more complaint about the standard broker contract:

Why is the broker named in the contract when it is not necessary (presumably the seller has a written listing contract creating his obligation to pay the broker when certain conditions are met) and the broker is not a party/signatory to the contract?

At least three explanations could be given, none of which favor the buyer:

1. The broker is getting the seller to reaffirm its obligation to pay a commission for this particular sale;

2. The broker is protecting itself from a claim of dual agency or agency for the buyer by having the buyer admit that the broker works solely for the seller; and,

3. The broker is attempting to make itself a third-party beneficiary to the contract, to lay the foundation for a possible lawsuit against the buyer for a loss of commission due to buyer's breach of the contract, even though buyer does not have an express contract with the broker.

10-19-2011 07:36 PM

Minnewaska

Quote:

Originally Posted by RhythmDoctor

Since fraud is a criminal act, I don't think it can be superseded by a contract.

If you want to protect yourself against other smaller things that do not meet the standard of "fraud," (such as suing instead of arbitrating disputes over condition, etc.) I can see why you would want to modify the contract.

Fraud can be both civil and criminal. Each have different burdens of proof. Civil fraud is easier to prove and can award monetary damages.

10-19-2011 03:02 PM

jameswilson29

Quote:

Originally Posted by sailingfool

...If these comments not only theory, can you share an actual boat purchase contract reflecting them?

Sure, the following is a simple contract for my personal use in Virginia. I appreciate any comments anyone might have:

CONTRACT OF SALE

THIS CONTRACT OF SALE is made this ____ day of ______________, 2011, by and between __________________________________________________ (“the Seller”) and _____________
______________________________ (“the Buyer”).

WITNESSETH: that for and in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, Seller and Buyer agree as follows:

2. Price. The total sales price for the Sailboat is _____________________________________
Dollars ($___________.00). Seller acknowledges receipt of an earnest money deposit check in the amount of _____ Hundred Dollars ($______) from Buyer, with the balance of the total sales price to be paid by Buyer to Seller at closing.

3. Seller’s Representations: Seller represents and warrants the following: that Seller has clear title to the Sailboat, free and clear of any liens, levies, charges, assessments, or attachments; that Seller is the sole owner, with full and complete authority to enter into this contract of sale and to transfer title to the vessel to Buyer by a certificate of title; that the Sailboat is in normal operating condition for a vessel of its age; and that Seller has no knowledge of any material defect(s) in the Sailboat, patent or latent, except as follows:__________________________________________ _ __________________________________________________ ___________.

4. Contingencies: The sale is subject to a satisfactory marine survey or professional inspection, and a satisfactory sea trial by Buyer, both to be completed at Buyer’s option and expense by ____________________. Seller shall make the Sailboat available for the survey and inspection and Seller shall cause the Sailboat to be placed in the water and ready prior to the sea trial at Seller’s expense. In the event that either the survey/inspection or sea trial are not satisfactory to Buyer in his sole discretion, then the earnest money deposit shall be forthwith refunded to Buyer.

5. Closing: This sale shall close on _____________________ at _____________________, at which time Buyer shall deliver to Seller a certified or cashier’s check for the balance of the Sales Price in return for Seller’s transfer of the title to Sailboat to Buyer, by endorsement and delivery of a certificate of title to Buyer and by Seller’s transfer to Buyer of any and all keys, locks, and operational devices. The Seller shall deliver and transfer the Sailboat to Buyer at closing, launched/re-launched in the water at _________________________________________. Risk of loss remains with Seller until delivery of title to Buyer.

6. Addresses: Seller and Buyer each warrant and represent to each other that his residential address and telephone number are as follows:
Seller:___________________________________________ _________________________
Buyer:____________________________________________ ________________________

7. Modification: This contract may only be modified by a writing signed by the parties.

WITNESS the following signatures and seals:

SELLER: BUYER:

__________________________(SEAL) ___________________________(SEAL)

__________________________(SEAL) ___________________________(SEAL)

10-19-2011 02:31 PM

jstroup

Quote:

Originally Posted by jameswilson29

Wow, I searched for your boat on Google - that is a beautiful boat!

Thanks, but if you mean the M36 listed in my sig, that's my "west coast" boat. The new one is a 1995 Morris Justine located in Maine. Just as beautiful as Yare in her own way. I think of Yare as Ginger and the new boat is Mary Ann. It was time to move up (over) to a cruiser.

Probably should update the sig one of these days.

10-19-2011 09:26 AM

sailingfool

Quote:

Originally Posted by jameswilson29

.....
"Buyer beware" should not be used a license to the seller and broker to act dishonestly, and the standard form that is used in the industry should not provide cover to the seller and broker to commit fraud with impunity.

Your comments make sense, but have you ever seen a boat purchase agreement that included them?

They just arn't relevant to the real-world boat buying process, I would expect if you tried to introduce an open liability for the seller (not to mention the broker) for defects in a used boat, which they may or may not know about, you would find yourself unable to buy a boat.

I think this tread was about how the boat buying process does and does not work, and someone taking your reservations to a deal would at least result in a lot of spinning wheels and legal battling to probably no gain.
If these comments not only theory, can you share an actual boat purchase contract reflecting them?

10-19-2011 08:00 AM

TakeFive

Since fraud is a criminal act, I don't think it can be superseded by a contract.

If you want to protect yourself against other smaller things that do not meet the standard of "fraud," (such as suing instead of arbitrating disputes over condition, etc.) I can see why you would want to modify the contract.

10-19-2011 07:37 AM

jameswilson29

Quote:

Originally Posted by sailingfool

I believe there is nothing wrong with the standard brokers contract, it has been reasonably structured to fairly cover the interests of all parties...

I do not like the mandatory arbitration clause in paragraph 13 and the limitation of seller's liability in paragraph 17. Together, they allocate the risk away from the seller and broker. (I also do not like the description of the subject matter property requiring a reference to an addendum that is likely the broker's listing - this requires the buyer to determine whether the description is adequate and complete.)

The big issue in these cases (or any case concerning the sale of a physical object) is fraud or misrepresentation concerning the condition and quality of the vessel. It seems the buyer has to pay to discover whether the seller and broker are honest, and if they are not, then the buyer can only recover his survey costs and he may have to force the issue by paying for arbitration.

Most people are honest and act in good faith. In most transactions, the written contract is never tested.

If the seller or broker are dishonest and I suffer damages as a result, I want to be able to sue them for fraud. The fear of being sued, and particularly being sued for fraud, does keep some folks honest. Unfortunately, industry practices sometimes conform to the standard forms used, and in this case, there is little incentive for the seller and broker to honestly disclose the true condition of the vessel.

Obviously, this contract was drawn up to protect the interests of the broker and the seller, and not the buyer. It would be difficult to amend the form to alter the basic structure of the transaction, with its reliance on the buyer's "acceptance" for final formation.

Look at the recent posting by the buyer who bought a boat only to discover that it had severe damage from a grounding that would cost him thousands of dollars. It is difficult to believe that the seller or broker did not know about that damage and failed to correct it or reveal it. A buyer can spend a lot of money buying a boat, not only for the survey, but also airline tickets, hotels, meals, valuable time lost, etc. At a minimum, the buyer is out the cost of a haulout and perhaps a survey.

"Buyer beware" should not be used a license to the seller and broker to act dishonestly, and the standard form that is used in the industry should not provide cover to the seller and broker to commit fraud with impunity.

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